What You Need to Know About Compensatory vs Punitive Damages in California

Compensatory and punitive damages are legal remedies as a consequence of an injury or loss. Here’s everything you need to know about compensatory vs punitive damages in California.

Compensatory damages are given to an injured party to help pay for damages inflicted on them. Punitive damages are meant to penalize the at-fault party.

Related: How to Calculate a Personal Injury Settlement Value

What are Damages?

Damages are a remedy of law. It refers to money that the losing side of a lawsuit must pay to the winning side in order to make up for losses or injuries. Any person who is harmed from the unlawful act may receive paid-out damages from the wrongdoer.

Damages require there be compensation in money, recovered by a party for loss or damages it has suffered due to the acts of another. The law of damages is based upon the principle that a person who is injured through a breach of contract, by a wrongful or negligent act, or by an omission of another party, should be fairly compensated to a degree equivalent to the sustained injury. The wealth or poverty of a person is irrelevant when it comes to damages. Except in the case of punitive damages, a plaintiff cannot receive more money than the value of the actual loss inflicted onto them by the defendant’s wrongful act.

There are two kinds of damages: compensatory damages and punitive damages.

  • Compensatory damages refer to the money that a defendant has to pay for the actual cost of an injury or loss.
  • Punitive damages refer to the amount of money that is more than the actual damages. It is a punishment for willful or malicious acts.

Compensatory Damages

Compensatory damages are the monetary sum awarded to a plaintiff in order to compensate them for the loss or injury done to them by the defendant. To be awarded compensatory damages, the calculation of damages must be done on a reasonable basis. Also, an individual is required to do all they reasonably can to minimize the damage accruing to them. Plaintiffs cannot be compensated for damages that could have been mitigated by reasonable effort.

Compensatory damages can be broken down into two kinds of damages: general damages and special damages. General damages compensate individuals for nonmonetary aspects of the harms suffered, such as pain and suffering.  Special damages compensate the plaintiff for measurable monetary losses, such as medical expenses or wage loss.

General Damages

General damages are damages that flow directly and necessarily from the injury inflicted on the plaintiff. These damages represent the types of damages that do not have a set monetary value. This typically includes:

  • Pain and suffering,
  • Injury to a plaintiff’s feelings as the result of an unlawful arrest,
  • The physical inconvenience, humiliation, and mental suffering as a result of false imprisonment,
  • The results of a personal injury, like bodily pain, suffering, humiliation, mental suffering, the causing or spreading of disease, and the sustainment of permanent physical injury,
  • The value of time lost by the plaintiff as the direct result of an injury (such as loss of salary or earnings, or even permanent impairment of earning capacity).

Special Damages

Special damages are damages actually sustained by the plaintiff which are not implied in law. This refers to losses in a specific amount. It requires proof of actual economic harm or out-of-pocket losses that can be documented.

Some examples in which a plaintiff may be compensated by special damages include:

  • Loss of wages,
  • Loss of services of a minor child,
  • Loss of collectible debts caused by the defendant’s destruction of accounting records,
  • Loss of prospective profits as a result of an act that deprives a personal property owner the use of their property, or the use of their property without permission,
  • The result of personal injuries, inflicted on the plaintiff by the defendant’s wrongful act, which made the plaintiff unable to continue the operation of their business,
  • The withholding of an opportunity to make an advantageous sale of stock due to wrongful attachment of the stock,
  • For attorney’s fees to obtain the plaintiff’s discharge from an unlawful arrest, and more.

Punitive Damages

Punitive damages are damages assessed in order to punish a defendant for his or her outrageous conduct. Punitive damages are intended to discourage oppression, fraud, or malice, by punishing the wrongdoer. Punitive damages are not intended to compensate the injured party for the actual damage they may have sustained. Punitive damages are assessed against a defendant purely as punishment. A court will examine the conduct and state of the wrongdoer, but they will not look at the nature of the loss suffered by the plaintiff, as they would under compensatory damages.

It is only possible to sue for punitive damages through tort action, and only if the plaintiff suffers actual injury. A tort is a lawsuit or action where a party hurt by the wrongful conduct of another, sues to get compensated for the injury they have suffered. It should be noted that a plaintiff is never entitled to an award of punitive damages as a matter of right. In order to sue for punitive damages, a plaintiff must present clear evidence that there was oppression, fraud, or malice on the part of the defendant.

Related: What Are Punitive Damages & When Are They Awarded?

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